Tangible Personal Property (or “TPP”) can typically be thought of as someone’s “stuff.” This includes clothes, furniture, and other household goods, pets, and stamp collections. Items that are not considered TPP are items used primarily for investment purposes (such as a valuable piece of artwork that a person may have purchased with the intent of selling at a gain rather than for personal enjoyment), items for use in a trade or business, or cash and bullion.
Tangible personal property is probate property. If an individual dies with no estate plan, these tangible items are passed along to those entitled to take pursuant to the intestacy statutes. This requires the probate court to oversee the estate administration process to ensure that the Personal Representative has properly distributed such assets to the rightful heirs-at-law. If the individual had a will-based estate plan, the process would be similar; however, the individual could name beneficiaries of such property rather than defaulting to the statutory distribution scheme.
The best way to ensure that any type of tangible property avoids probate is by assigning the ownership over to a revocable trust. This may not seem possible for tangible personal property because items such as furniture, clothing, and jewelry do not have “titles” the same way bank accounts do. Despite this obstacle, it is still possible to create an Assignment of Tangible Personal Property, which transfers ownership from the individual over to the trustees of a revocable trust. This allows for a smooth administration of tangible property from the trust without the hassle of court oversight.
Clients often ask whether they can leave their entire estate to their spouse but their treasured grandmother’s handmade quilt to their sister instead – and the answer is Yes! Clients may create a separate Memorandum of Tangible Personal Property, listing specific assets and the intended beneficiary. The Memorandum can be incorporated by reference into the estate plan, meaning that it will have a binding effect without the need for signatures, notaries or witnesses. The client can update the Memorandum over time without the need to return to their attorney to edit their documents – simply including an updated Memorandum with the estate plan is enough.
Planning for the distribution of Tangible Personal Property is a critical part of any estate plan. If you would like to discuss the distribution of your Tangible Personal Property and other assets as part of an estate plan, contact us at Mulhall Withrow today. We can help ensure your assets go to the people you love without a difficult court process.